Here we outline our four businesses, through which we contribute widely to the lives of people around the world.
Machine tools
Citizen began production of machine tools in 1936, utilizing the technologies and know-how developed through the manufacture of watch parts. Our products contribute to the development of manufacturing industries all over the world.
About Us
More than a century since it was founded in 1918 with the desire to produce Japanese-made watches, the CITIZEN Group has evolved into a corporate entity engaged in a wide range of businesses.
CITIZEN's corporate philosophy, "Loved by citizens, working for citizens" is to
deeply contribute to the lives of people around the world through the manufacturing of products that are loved and trusted by citizens.
Message From President & CEO
Crafting a new tomorrow Towards sustainable value creation
The CITIZEN Group has been a participant in the United Nations Global Compact since April 2005 and endorsed the ten principles in four areas, continuing efforts to realize them. We have also established our corporate philosophy of “Loved by Citizens, Working for Citizens,” with the CITIZEN Group Code of Conduct as specific action guidelines for this philosophy, and always consider what we should do as a good corporate citizen. Article 3 of the CITIZEN Group Code of Conduct calls for the Group to “engage in business practices that are fair, transparent, open to competition, and responsible.” Through these and other means, we strive to act not only in compliance with laws and regulations but also in line with a high level of ethics overall. In addition, as our businesses are growing increasingly complex from day to day amid growing globalization, in April 2020, we formulated the CITIZEN Group Anti-Corruption Policy, which systematically describes the Group's thinking and position toward the elimination of corruption in its various forms, including improper acts and bribery. Based on these policies, we strive to build sound relationships of trust with customers, suppliers, and other stakeholders, with every employee in the Group maintaining a high level of compliance consciousness.
The CITIZEN Group Anti-Corruption Policy (Established: April 1, 2020)
Preface
Since its establishment, the CITIZEN Group has been seeking to contribute widely to the lives of people around the world through its business activities under the corporate philosophy of “Loved by Citizens, Working for Citizens”. The CITIZEN Group recognizes that corruption in all its forms, including extortion and bribery, is one of the key issues that significantly undermines corporate trust. We will clarify our attitude that we will not allow any such misconduct in the pursuit of profits and will actively work to prevent corruption, including giving or receiving any gift or entertainment that may cause social suspicion or distrust, and will build a sound relationship with our stakeholders. We also seek understanding and cooperation for similar initiatives throughout the supply chain.
We will comply with the international anti-corruption rules and laws and the regulations relating thereto in the countries and regions where we do business.
We will not give or receive gifts or entertainment for the purpose of acquiring or maintaining unfair profits or preferential treatment. Also, we will not give or receive gifts or entertainment in a manner that deviates from normal business practices or social common sense. We will continue to review our business practices to ensure economic rationality, consumer interests, transparency, and fairness.
Based on fair, transparent, and free competition, we will maintain clean and healthy relationships with government agencies, for example, by prohibiting facilitation payments.
We will not approach antisocial forces and will not be involved in such crimes as money laundering.
In order to prevent the violation of laws and regulations, to detect such violations early on, and to reinforce our self-cleaning actions, we will establish an internal reporting system that allows anonymous reporting to both internal and external organizations.
By working to understand social trends related to anti-corruption and by implementing anti-corruption education, we will continuously improve our anti-corruption efforts as needed, including training officers and employees on this policy and the relevant internal rules.
In the event that an unexpected situation arises in relation to the prevention of corruption, we will promptly investigate the cause, take appropriate action to prevent recurrence, disclose information to the public, and fulfill accountability.
We will conduct audits to ensure that the anti-corruption system based on this policy is functioning properly, that necessary training is provided, that appropriate responses can be made to unforeseen circumstances, and that accountability and other actions are satisfied through information disclosure. Audit results will be periodically reported to the Board of Directors. This policy shall be reviewed periodically and approved by the Board of Directors.
Compliance Training and Internal Auditing
Employee Training
To ensure that all members of the CITIZEN Group share a common awareness of compliance, we regularly conduct training, education, and audits concerning the CITIZEN Group Code of Conduct and the CITIZEN Group Anti-Corruption Policy, and other guidelines to raise compliance awareness throughout the Group.
FY2023 Training Results
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Training
Content
Participants (subjects)
Compliance training
Training on the Code of Conduct, Anti-Corruption Policy, Human Rights Policy, etc.
6,184 persons
Anti-Corruption Initiatives
The CITIZEN Group's Anti-Corruption Initiatives
In addition to the CITIZEN Group Anti-Corruption Policy, which prohibits acts of corruption, including bribery, the CITIZEN Group has also established the CITIZEN Group Anti-Bribery Regulations as internal Group rules. These policies and rules are disseminated to all Group members and all employees, through e-learning training programs.
The CITIZEN Group strives to stay abreast of social trends and conditions within the Group and ensure business practices that are fair, transparent, open to competition, and responsible through revising its initiatives as necessary.
Anti-Corruption Initiatives in the Supply Chain
The CITIZEN Group Anti-Corruption Policy requires suppliers to understand and cooperate with the Group's initiatives based on this Policy. Specifically, we distribute “Requests for Suppliers” including the Anti-Corruption Policy to our suppliers in Japan and around the world.
Since FY2021, suppliers have been asked to confirm and consent to the content of CITIZEN's rules and policies, such as the Group Anti-Corruption Policy, the Group Code of Conduct, the Group Human Rights Policy, and the Group Basic Policy on Health and Safety when concluding new contracts and renewing contracts. Thus, we are working to ensure that they are fully aware of the prevention of corrupt practices.
In addition, CITIZEN WATCH conducts ongoing internal audits once a year for each department. Based on a checklist prepared by the Audit Office, each department conducts self-checks, and spot checks are also conducted to help make improvements.
The key theme for FY2023 is strengthen management of critical information and for FY2024 is contract management.
To comply with laws and regulations and to prevent, quickly identify, and eliminate improper acts,*1 including bribery and corruption, the CITIZEN Group has established internal whistleblowing systems, incorporating the Speak Up system, to enable any Group employees to submit reports, request consultation, and make suggestions anonymously to CITIZEN WATCH, other Group companies, and external agencies.
Furthermore, we have established the new Group Compliance Hotline Rules in reference to the internal whistleblowing guidelines established by the Consumer Affairs Agency and to the Corporate Governance Code covering matters such as the protection of user confidentiality and the prohibition of disadvantageous treatment. We have also formed guidelines for users and management staff to ensure the standardization of the responses of those receiving calls, as part of efforts to make the system safer and easier to use for employees, including retirees who have been away from the Company for less than one year. This system is also compatible with the revised Whistleblower Protection Act that came into effect on June 1, 2020. In addition, to enhance the effectiveness of the system, it is essential that whistleblowers are informed of the protection of whistleblowers, including the prohibition of any prejudicial treatment of whistleblowers. In the FY2022 survey, 84.0% of employees were aware of the hotline. In FY2023, in addition to the notification through training for management staff and on the dedicated intranet page, information on the hotline using QR codes was placed in break rooms and other locations throughout the Company. As a result, awareness of the hotline has increased for the fifth consecutive year to 87.0%.
The number of whistleblowing reports in FY2023 was 30, consisting of 24 received internally, 5 received by external contact points and 1 from auditors *2.
As a result of investigations and corrective actions taken on all reports, there were no cases of serious human rights violations or violations of the Anti-Corruption Policy.
In FY2024, we will continue to promote awareness of the hotline and create working environments for thorough compliance by further utilizing opinions received and developing rules concerning new work styles, such as remote work.
Our approach to the prevention of improper acts is established in Article 3 of The CITIZEN Group Code of Conduct, which calls for the Group to "engage in business practices that are fair, transparent, open to competition, and responsible" (fairness, transparency, openness to competition, responding to government agencies etc., export/import controls, prohibition of contact with antisocial forces, prevention of money laundering, responsible and sustainable procurement).
As a result of investigations and corrective actions taken on all reports, there were no cases of serious human rights violations or violations of the Anti-Corruption Policy.
Intellectual Property Strategy
The CITIZEN Group respects the intellectual property rights of others and strives not to infringe on them.
Therefore, we are constantly checking for infringement on the intellectual property of others, and if we discover any obstacles to the rights of others, we promptly take countermeasures to prevent infringement before it happens.
At the same time, we identify the intellectual property necessary to advance our business and proactively acquire the rights to such property. In addition, when we discover infringements of our intellectual property rights by third parties, we take resolute countermeasures.
Furthermore, we are more effectively engaged in the planning and implementation of management and business strategies and promoting activities to contribute to the Company's sustainable growth by utilizing intellectual property information.
The CITIZEN Group will, in line with the intent of the intellectual property rights system, continue to promote appropriate and effective intellectual property activities.
Security Trade Controls
The CITIZEN Group has established the CITIZEN Group Rules for Security Trade Control to provide reliable and secure trade management within the Group. We have also established the CITIZEN Group Security Trade Control Committee, comprising CITIZEN WATCH and operating subsidiaries. This committee provides guidance, education, and information to Group companies and carries out audits.
CITIZEN MACHINERY takes measures to prevent the improper export of industrial machineries and their improper resale or re-export overseas in order to ensure compliance with the Foreign Exchange and Foreign Trade Control Law. We have continued to reinforce export controls by preventing the improper use of industrial machineries with measures such as the installation of relocation detection functions as a standard feature on all products to render equipment inoperable in the event of unauthorized relocation. Thus, even after export, we strive to control the users and uses of the machinery to ensure that it is not used for the development of weapons of mass destruction, etc. through resale or re-export.
Information Security
In recent years, there has been an increasing number of cases of cyberattacks that have a devastating impact on the entire supply chain, such as the shutdown of all domestic bases. The CITIZEN Group recognizes the risks related to information security, such as information leaks and system downtime, as important risks and has strengthened its structure by establishing the Group Information Governance Committee in 2016, chaired by the director in charge of general affairs, to address personal information protection, trade secret management, and information security management.
Specifically, we are working to disseminate the CITIZEN Group Information Security Policy, which was revised in November 2020, throughout the Company, and are also working closely with our overseas offices to promote the understanding of the importance of information security, based on compliance with the laws and regulations of each country. We are also constantly alerting our employees to ransomware and phishing e-mail scams, and we are working to foster information security awareness throughout the Group, both in Japan and around the world, by conducting targeted attack e-mail training twice a year in FY2023.
We are building a system to implement security measures in cooperation with the information system departments of our main overseas bases and the head office department to maintain the IT environment for CITIZEN WATCH's global operations.
We actively use data centers and cloud services to build a safe and stable IT infrastructure that is resistant to accidents and disasters to protect the information system environment. The initiatives we have in place also contribute to power savings and CO2 emissions reduction.
CITIZEN-SIRT Initiatives
The CITIZEN-SIRT, which was established in June 2020, monitors risks, such as system downtime that deviates from the usual time, and incident occurrence to safeguard against major incidents, such as cyber-attacks. It responds promptly to any suspected incidence from the initial response to cooperation with the relevant departments and problem resolution.
In FY2022, CITIZEN-SIRT took the lead in conducting desk training to promote quick response to incidents. By using scenarios created with the cooperation of security vendors, confirmation work was conducted on how to respond to the detection of potential issues. In FY2023, we conducted training at Group companies and reviewed the Group's overall security environment, including formulating a business continuity plan and response guidelines in preparation for incidents.
In addition, based on minor incidents that did not lead to information leaks or system downtime that occurred in FY2021, we introduced a network monitoring system (EDR) to prevent cyber-attacks into CITIZEN WATCH's system environment in FY2022 and strengthen the network security. In FY2023, the installation of EDRs was completed at all 34 CITIZEN WATCH sites. An incident that was handled by CITIZEN-SIRT occurred at one of our overseas locations in FY2023. Accordingly, the incident was promptly addressed, and information on the incident was shared with IT and risk management personnel at Group companies to prevent recurrence.
Protection of Personal Information
The CITIZEN Group, under the supervision of the Group Information Governance Committee, has established and disseminated its policy for handling all personal information, which is provided by customers, suppliers, and other stakeholders in business activities, based on the CITIZEN Group Information Security Policy and the CITIZEN Group Privacy Policy. We are committed to continued maintenance and management of information protection, including e-learning on the protection of personal information for employees of domestic Group companies. The specifics of the CITIZEN Group Privacy Policy are as follows.
TOKYO BIJUTSU, a publisher of art books and other publications, acquired the right to use the PrivacyMark* in 2007 to ensure the protection of personal information and strives to secure the trust of business partners. In March 2023, the PrivacyMark certification was renewed for the eighth time. Training on personal information protection is regularly provided to all employees, including part-time workers, and tests to verify the effectiveness of the training have confirmed that awareness of personal information protection has firmly taken root. In FY2024, we will continue our efforts to strengthen information security, including the handling of confidential information.
* PrivacyMark: A registered trademark (service mark) approved for use by the Japan Information Processing Development Center (JIPDEC) for businesses that meet certain requirements for personal information protection.
Handling Anti-Social Forces
The CITIZEN Group recognizes that connections to anti-social forces significantly impair social credibility in a company and have a serious impact on the company's continued existence. Therefore, our fundamental policy is to take a firm stand against demands for unjust favors or the like from anti-social forces and organizations, and we are thoroughly committed to severing any relationships with anti-social forces.
We have developed and reinforced systems that block any relationships with anti-social forces by introducing clauses to exclude organized crime groups in the various contracts entered by Group companies. Furthermore, we are constantly promoting activities to eliminate antisocial forces in cooperation with local businesses, the police, and other external organizations concerned.
Training Sessions on the Act against Delay in Payment of Subcontract Proceeds Etc. to Subcontractors
To ensure appropriate subcontracting transactions and prevent violations of the Act against Delay in Payment of Subcontract Proceeds Etc. to Subcontractors, the CITIZEN Group provides on-the-job training in the workplace as well as guidebooks and e-learning programs to systematically learn about the basics of the Act.
The CITIZEN Group's business is supported by many business partners at every stage of the value chain. We are working to improve our business methods to make them more desirable to build a true win-win relationship for both the contactee and the contractor.
CITIZEN WATCH also endorses the Partnership Building Declaration promoted by the Ministry of Economy, Trade and Industry. The Company is committed to building new partnerships for collaboration, coexistence, and coprosperity with supply chain business partners and other value-creating enterprises.
The CITIZEN Group recognizes that paying appropriate taxes is not only an obligation but also an important social contribution in line with its corporate philosophy of “Loved by citizens, working for citizens.” We fulfill our corporate social responsibility by paying appropriate taxes and increasing tax transparency through appropriate disclosure. In FY2023, the Company provided e-learning programs, etc. for all employees of CITIZEN WATCH to familiarize them with the proper tax practices and to ensure their tax compliance.
The CITIZEN Group Tax Policy (Enacted: April 1, 2023)
Based on the corporate philosophy of “Loved by citizens, working for citizens,” the CITIZEN Group believes that paying appropriate taxes is not only a duty, but also an important social contribution. Based on this belief, the CITIZEN Group hereby establishes the CITIZEN Group Tax Policy as the Group's unified basic policy on taxation.
Compliance with Laws and Regulations
The CITIZEN Group shall comply with the tax laws and regulations of each country and region in which it operates, respect the OECD Guidelines and other international tax rules, and file tax returns and pay taxes in an appropriate and timely manner.
Tax Governance
Under the supervision of the director in charge of the Accounting Department, CITIZEN WATCH Co., Ltd. confirms tax information of its subsidiaries as the parent company and strives for centralized management of tax risks by the parent company. If tax risks become apparent during tax audits, etc., at subsidiaries, we gather detailed information and take appropriate action.
Tax Planning
The CITIZEN Group makes effective use of tax incentives, etc. in each country and region where they are available during normal business activities and strives to achieve an optimal tax burden. We do not engage in excessive tax planning or use tax havens for the purpose of tax avoidance, contrary to the intention of laws and regulations.
Transfer Pricing Taxation
The CITIZEN Group strives to distribute profits appropriately according to functions and risks based on the concept of arm's length pricing for international transactions between Group companies. We also strive to prepare appropriate transfer pricing documentation in accordance with the transfer pricing taxation systems of each country and region.
Tax Risk Management
The CITIZEN Group thoroughly considers tax risks in business activities in advance, and if necessary, seeks advice and guidance from external experts to reduce tax risks. If any questions arise regarding tax treatment or interpretation, etc., we will respond appropriately by seeking advice from outside experts, etc., or making prior inquiries to the tax authorities as necessary.
Relationship with Tax Authorities
The CITIZEN Group strives to maintain appropriate relationships with tax authorities through honest responses and fact-based explanations.
